RANGERS & THE BALTIC GANGSTERS
Murray accountant tells court of dodgy offers
RANGERS rejected a bid to buy the club because it was backed by a Lithuanian bank with links to organised crime, a court heard yesterday.
And another 50million euro bid – introduced by the brother of an unnamed English Premier League football club manager – was thrown out because a proof of funds note from a Belgian bank was a fraud, the High Court in Glasgow was told.
Mike McGill, a chartered accountant from the Murray Group, revealed the bids as he gave evidence at the trial of former Rangers owner Craig Whyte.
McGill told the court that Whyte told him his takeover of Rangers would be funded from his own “personal resources”.
And he said that Rangers had used ticket company Ticketus to provide up-front cash for working capital of around £6million for each of two seasons before Whyte’s takeover.
McGill, 49, told prosecutor Alex Prentice QC about some of the bids that had been made for Rangers ahead of Whyte’s involvement.
He said: “There was interest from individuals introduced to us from a credible source, the brother of an English Premier League football club manager.”
McGill said two individuals were fronting that bid and had a letter from a Belgian bank pledging 50million euros.
But one had the same name as a banned UK director.
McGill added: “The letter from the bank was fraudulent. It was forged, so we ceased any discussion with them whatsoever.”
He said that a Lithuanian bank had also made a bid for the club, but the Murray Group had suspicions about them.
McGill added: “The Murray Group was exceptionally uncomfortable in dealing with the Lithuanian bank. There were allegations that it was linked to money laundering.”
He said another consideration in rejecting that bid was the involvement of a Lithuanian bank in another Scottish football club at the time, saying it could have led to a “furore”.
At the time – 2010 – Vladimir Romanov, a Lithuanian banker, was the controversial owner of Hearts FC.
McGill was a director at Murray Group and then later at Rangers. He first met Whyte in October 2010.
Whyte, 46, denies charges of fraud and “assistance” under the Companies Act over his May 2011 takeover of Rangers.
McGill told the court he had been placed on the Rangers board along with another Murray Group executive, Donald Muir.
The two were there for “governance, to assist with financial discipline, and enable the Murray Group to communicate with the board”.
McGill said the formal decision to sell the club had been taken in 2009, as part of “Project Charlotte”, the plan to re-structure the Murray Group, sell off assets and drive down debt.
Speaking about the Rangers sell-off decision, he added: “Rangers, by its nature, absorbed a disproportionate amount of time, energy and effort.
“It also had limited value going forward.”
McGill said a formal decision to sell the club had been taken in 2009 but
‘At all times Mr Whyte assured us that the funds were coming from his personal resources’ MIKE McGILL
there had not been a huge amount of interest from potential buyers.
He added: “We would try and filter out those just being nosey and those who were time-wasters.”
McGill said Rangers’ bankers Lloyds wanted out of the club, but that this was because they “wanted out of the sector”.
He said: “It was no secret that they funded 10 of the 12 Scottish Premier League clubs and they funded a number of clubs in England as well.
“It was not just Rangers they wanted out of, they wanted out of the sector as a whole.”
McGill told the court that parameters laid down by the Murray Group for the sale covered three areas.
They wanted the Lloyds Bank “term loan” paid off, they wanted to secure investment for the playing squad and they wanted some return for Murray Group shares.
But the third condition “wouldn’t be a barrier” if the first two were met.
He said the finances of Rangers were “almost entirely dependent” on participation in the Champions League each year.
McGill added: “If you did not secure that TV and media money, the club would make substantial losses. That was the fundamental problem.”
He said the Murray Group did not have the necessary funds to invest in Rangers.
Asked by Prentice if he received “incentives”, McGill said he did. But he added that it was not unusual in the corporate world and was dependent on him achieving “milestones” such as debt reduction.
He said Rangers had used Ticketus to provide cash advances of around £6million in each of the seasons 2009-10 and 2010-11.
McGill said the company were used to provide advance cash for working capital against season ticket sales.
He added: “There was no desire to hide it but it was recognised that for some fans, that would be a sensitive issue.”
Asked by Prentice if Rangers would ever have considered multi-season sales to Ticketus, McGill said they would not.
He said: “It was considered completely unpalatable to mortgage the future of the club and the fans’ money in that manner.”
He added that after a meeting with Whyte, he received an email with proof of funds from Gary Withey.
McGill said: “The email was confirmation from the lawyer acting for Mr Whyte that they had funding in place.
“At all times, Mr Whyte assured us that the funds were coming from his personal resources.”
The court saw emails from Withey, of Collyer Bristow, acting for Whyte, over proof of funds.
McGill was shown the share purchase agreement, a legally binding obligation on both parties, dated May 6, 2011.
Asked by Prentice where Murray Group thought the funds were, McGill said: “Our expectation was that the funds were resting in the client account of Collyer Bristow. “Confirmation was obtained from Gary Withey and Collyer Bristow.” Asked what he would have done if he had any reason to suspect the funds might not be in place, McGill said: “We would not have completed the transaction.” Prentice asked what the Murray Group would have done had they known that the debt was to be paid off by three years’ season ticket money from Ticketus. McGill said: “We would not have completed the transaction. “Using the season tickets in that manner was completely unpalatable to us.
“In addition to that, that transaction would solely and simply replace one third-party debt provider with another third-party debt provider.
“One of our primary goals was to eliminate the bank debt.”
Prentice said: “But the club would no longer be yours – why would that matter to you?”
McGill said: “That mattered to the Murray Group and Sir David because that would be the legacy he left behind.”
McGill was asked to read legal requirements from the share purchase agreement. Part included reference to investment in the playing squad.
Asked by Prentice what the clause meant, McGill said: “That is Mr Whyte making available the £5million for investment in the playing squad.
“That could only be drawn down for the purposes of investment in the playing squad.”
The trial continues.